In a photo released by Target Corp., President Gregg Steinhafel is shown. The discount retailer said Wednesday that Chief Executive Bob Ulrich will retire May 1 and be replaced by Steinhafel. (AP Photo/Target Corp., Johansen Krause) * NO SALES *

Under fire from gay rights groups for a political donation that benefitted Republican gubernatorial candidate Tom Emmer, an opponent of same-sex marriage, Target Corp. CEO Gregg Steinhafel on Tuesday sent a letter to employees at its Minneapolis headquarters to defend the company’s record on gay rights.

“Let me be very clear, Target’s support of the (gay, lesbian, bisexual and transgendered) community is unwavering, and inclusiveness remains a core value of our company,” Steinhafel wrote, saying the donation was to support candidates who want to improve Minnesota’s business climate.

After a recent U.S. Supreme Court ruling loosened rules on corporate campaign spending, Minnesota companies now have rights they never had before — rights that come with risks.

That Target, a company with a stellar reputation within the gay community for its policies and benefits, could so easily be placed on the defensive demonstrates the challenges of wading into politics, especially for image-conscious retailers.

Companies are now allowed to spend money on political ads, mailers and other activities, though prohibitions on giving directly to candidates remain.

Target executives typically have been politically active — Steinhafel himself donated $10,000 to an April fundraiser for U.S. Rep. Michele Bachmann featuring Sarah Palin. Now, that right extends to the company itself.

In the wake of the court decision, Minnesota business groups formed MN Forward, a political action committee headed by Brian McClung, a former spokesman for Gov. Tim Pawlenty. Target, Best Buy, Red Wing Shoe Co., Polaris and several other Minnesota-based companies have donated more than $1 million — Target topped the list at $150,000.

MN Forward says it backs Republicans and Democrats who support business-friendly policies. Its first ad was a pro-Emmer spot touting him as the best candidate to bolster Minnesota’s economy.

Gay rights organizations and Democratic-Farmer-Labor groups protested. An anti-Target Facebook page went up. It became a hot topic on the social media service Twitter.

The protests pointed not to Emmer’s tax policies but to his stance on gay rights. As a member of the Minnesota House, Emmer voted against offering domestic partner benefits to state employees and allowing local government to do the same.

“Here we have a really clear line in the sand about what kind of leadership our state could have next,” said Monica Meyer, public policy director for OutFront Minnesota, a gay rights group that posted an open letter to Target on its website.

Heather LaMarre, a journalism and public relations professor at the University of Minnesota, said the episode should serve as a lesson for politically active companies, particularly those that rely on their relationships with customers.

“They can’t make bottom-line decisions anymore without thinking about other stakeholder groups,” LeMarre said, adding that social media such as Twitter and Facebook can amplify any company’s activities beyond water-cooler chatter.

While Steinhafel seemed to be responding to criticism, another MN Forward donor seemed to be taking a pre-emptive approach with its employees.

Best Buy’s $100,000 donation was not readily known until campaign finance reports were released Tuesday morning. At the same time, Best Buy brass sent an e-mail to employees explaining the donation.

“Best Buy’s contribution to MN Forward provides support for candidates with policies that focus on issues encouraging job creation and economic growth,” the e-mail stated. “While the governor’s race is receiving the most attention at this point and MN Forward has released a TV ad in support of Tom Emmer, the group is also going to be involved in state legislative races and will be supporting both Democrats and Republicans.”

The e-mail offered Best Buy employees a place to go online to discuss the issue. A spokeswoman said the company had received a handful of employee comments and customer calls.

The controversy is particularly difficult for Target, which has cultivated an inclusive image. Its company policies and benefits for gay, lesbian, bisexual and transgendered workers are among the best in the business, earning a perfect 100 percent score from the Human Rights Campaign.

“Certainly the fact that they have donated to this committee is very troubling,” Human Rights Campaign spokesman Michael Cole said.

Cole said the group does not factor political donations into its corporate ranking system, but he added that the group has contacted Target to express its concerns.

While there is no evidence the donation is affecting sales, there are risks to Target’s bottom line. It has been expanding locations in urban centers, which typically vote Democratic and are more receptive to gay-friendly policies. In recent years, Target has opened stores in New York, Washington, D.C., and Chicago, and is seeking approval for a San Francisco store.

McClung, of MN Forward, pointed out that a majority of U.S. states allow corporate spending on PACs, and he said he knew of no company that declined to donate over concerns about publicity.

He pointed out that several PACs supported by DFL donors and unions have vastly outstripped MN Forward in fundraising. One group, the Alliance for a Better Minnesota, has attacked Emmer repeatedly and has a new television ad starting today.

“MN Forward is going to focus strictly on issues related to jobs and the economy. We are not involved in social issues,” McClung said.

But LaMarre said now that corporate contributions are backing candidates, companies would be wise to consider all of a candidate’s positions, not just their economic policies.

“They put all their eggs in one basket, and we have to look at life differently now,” LaMarre said.

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